Guest Post by Dennis Miller at Miller On The Money
Chairman and CEO of JPMorgan Chase, Jamie Dimon wrote shareholders about banking turmoil, “As I write this letter, the current crisis is not yet over, and even when it is behind us, there will be repercussions from it for years to come.”
IGI Global defines a banking crisis:
- Banking crisis reflects the crisis of liquidity and insolvency of one or more banks in the financial system. Due to bank’s sizable losses, bank encounters critical liquidity shortage…disrupting its ability in repaying the debt contracts and the withdrawals demanded by depositors.
- A subset of financial crises that are felt acutely within the banking sector…having national and international implications wherein either the given capital of the banking system is practically exhausted,…or where the cost of resolving the problems of a financial system amounts to at least 3-5% of the national Gross Domestic Product.
Banks lose billions on high-risk investments, creating a tsunami of economic problems. Private businesses fail all the time. Why is the banking system treated differently?
No one worried about a “banking crisis” until 2008. The bank bailouts amounted to trillions, punishing savers & taxpayers in the process. Repealing the Glass-Steagall act in 1999 created “too big to fail”, mega casino-banks. JP Morgan, Wells Fargo, Bank of America, Citigroup and US Bancorp control 40% of the wealth of the nation.
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